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Do YOU need to file Form 8938? “Statement of Specified Foreign Financial Assets”

Do YOU need to file Form 8938? “Statement of Specified Foreign Financial Assets”

What taxpayers need to know about Form 8938.

Every tax year, U.S. taxpayers are required to report any financial assets held outside the country to the Department of the Treasury if those assets have a combined value greater than $10,000. If the combined value of those assets exceed $50,000, additional reporting to the Internal Revenue Service is also required for individual taxpayers. These additional foreign financial assets are reported on Form 8938, a “Statement of Specified Foreign Financial Assets,” as part of the annual income tax return.

There are three most relevant criteria for determining the Form 8938 filing threshold that may apply to a taxpayer:

(1) Whether the taxpayer is a Specified Individual or a Specified Domestic Entity; taxpayer resides in the United States or outside of the United States

(2) The taxpayer’s tax return filing status; and

(3) Financial assets exceed threshold under one’s category:

Single living in the US – foreign financial assets reach more than $50,000 on last day of tax year or exceed $75,000 anytime during tax year

Married with joint income tax return living in the US – foreign financial assets reach more than $100,000 on last day of tax year or exceed $150,000 anytime during tax year

Married with separate income return living in the US – foreign financial assets reach more than $50,000 on last day of tax year or exceed $75,000 anytime during tax year

Taxpayer living abroad – foreign financial assets reach more than $200,000 on last day of tax year or exceed $300,000 anytime during tax year; or your joint tax return and your foreign financial assets reach more than $400,000 on last day of tax year or exceed $600,000 anytime during tax.

Few examples:

  1. I am not married and do not live abroad. The total value of my specified foreign financial assets does not exceed $49,000 during the tax year. You do not have to file Form 8938. You do not satisfy the reporting threshold of more than $50,000 on the last day of the tax year or more than $75,000 at any time during the tax year. I am not married and do not live abroad. I sold my only specified foreign financial asset on October 15, when its value was $125,000. You have to file Form 8938. You satisfy the reporting threshold even though you do not hold any specified foreign financial assets on the last day of the tax year because you did own specified foreign financial assets of more than $75,000 at any time during the tax year.
  2. My spouse and I are U.S. citizens but live abroad for the entire tax year and file a joint income tax return. The total value of our combined specified foreign financial assets on any day of the tax year is $150,000. You and your spouse do not have to file Form 8938. You do not satisfy the reporting threshold of more than $400,000 on the last day of the tax year or more than $600,000 at any time during the tax year for married individuals who live abroad and file a joint income tax return.

Call us today (512) 710 -1000, and we are here to help you find out if you would need to file Form 8938.